Euro-zone jitters drag Sensex to day’s lows in noon trades

Stock markets in India, which had capitalized on the initial momentum after the gap up opening, seem to have lost their direction in Thursday afternoon trades. The benchmark equity indices that were trading with over a percent gains in mid morning trades have gone on to trim most of it and have made fresh lows for the day. Supportive cues from Asian markets were providing the much needed support to local markets. Investors’ morale got buttressed in the region on the back of reports that the world’s third largest Japanese economy expanded at a faster than expected rate of 1% in the first quarter of 2012. The encouraging reports came after US data showed overnight that Industrial production in the world’s largest economy climbed more than forecast in April, propelled by gains in auto manufacturing and utility use. However, disappointing cues from European market took their toll on domestic sentiments in noon trades and pummeled the frontline gauges below the important psychological 4,900 (Nifty) and 16,100 (Sensex) levels. Investors took to profit booking following the fall in European markets as apart from Greek political instability, fresh concerns over ECB’s denial to provide liquidity to some undercapitalized Greek banks until they sufficiently boost their capital, dissuaded investors from riskier asset classes like equities. Moreover, concerns from the money market are showing little signs of dying down as after showing strength earlier in the session the rupee has come in close proximity with the historical lows hit in last session. Investors grew increasingly worried about the recent sharp fall in Indian currency despite repeated interventions by Reserve bank of India as relentless risk aversion hit markets and highlighted the vulnerabilities of a country facing challenging fiscal and economic outlooks. On the BSE sectoral space, buying was evident in the defensive - FMCG counter which topped the chart with close to two percent gains followed by the high beta Realty pocket that surged around one and half a percent. On the flipside, the falls in heavyweight Capital Goods sector by around three fourth of a percent and defensive Healthcare index by about half a percent, capped the upside chances for the bourses.

Moreover, the broader markets too came off the highs of the day and underperformed their larger peers, trading with gains of little over half a percent. The bourses climbed on weaker volumes of over Rs 0.7 lakh crore while the market breadth on BSE was in favor of advances in the ratio of 1436:976 while 107 scrips remained unchanged.

The BSE Sensex is currently trading at 16,143.11 up by 113.02 points or 0.71% after trading as high as 16,240.18 and as low as 16,104.64. There were 21 stocks advancing against 9 declines on the index.

The broader indices were trading on a positive note; the BSE Mid cap index advanced 0.50% and Small cap index ascended 0.63%.

On the BSE sectoral space, FMCG up 1.97%, Realty up 1.44%, Metal up 0.96%, Power up 0.86% and Bankex up 0.81% were the major gainers, while Consumer Durables down 0.75%, Capital Goods down 0.71%, Healthcare down 0.30% and IT down 0.29% were the major laggards in the space.

ITC up 2.74%, DLF up 2.67%, HDFC up 2.27%, Tata Motors up 2.27% and Jindal Steel up 1.83% were the major gainers on the Sensex, while Cipla down 2.58%, L&T down 1.57%, Bajaj Auto down 1.24%, Sun Pharma down 1.15% and M&M down 0.80% were the major losers in the index.

Meanwhile, Sugar producers will now be allowed to apply for a registration certificate (RC) of up to 25,000 tonnes, as per a notification issued by the Commerce Ministry. Further, the time limit for completing the export order will be 60 days as compared to the earlier 30 days.

On May 14, the Directorate General of Foreign Trade (DGFT) had issued a public notice stating that the issue of RC could be for an amount of up to a maximum quota of 10,000 tonnes only. This was opposed by Pawar and Thomas. Now in reconciliation, the limit has been increased to 25,000 tonnes. The application for the second and subsequent RC can be made after exporting at least 50% of the allotted quantity.

Sugar industry in India was so far completely controlled by the government with the government fixing limits on the amount producers could sell in the domestic as well as the international markets. However keeping in view the increase in demand and the pending arrears that the sugar mills need to pay to the farmers, the government had decided to free its exports.

Sugar production has touched 26 million tonnes in 2011-12 as compared to the annual domestic demand of 21.5-22 million tones. India is the second largest producer and the largest consumer of sugar in the world.

The S&P CNX Nifty is currently trading at 4,895.00, higher by 36.75 points or 0.76% after trading as high as 4,922.25 and as low as 4,878.60. There were 31 stocks advancing against 19 declines on the index.

The top gainers on the Nifty were Ambuja up 3.21%, ITC up 3.08%, DLF up 2.67%, SAIL up 2.60% and Tata Motors up 2.42%.

Cipla down 2.50%, BPCL down 1.87%, L&T down 1.58%, Bajaj Auto down 1.33% and Sun Pharma down 1.13% were the major losers on the index.

In the Asian space, Shanghai Composite surged 1.18%, Hang Seng gained 0.18%, KLSE Composite soared 1.01%, Nikkei 225 climbed 0.86%, Straits Times Index advanced 0.39%, KOSPI Composite rose 0.26% and Taiwan Weighted jumped 1.69%.

Stock markets in Indonesia remained closed on Thursday owing to a public holiday on account of Ascension Day of Jesus Christ.

The European markets drifted lower as France’s CAC 40 fell 0.26%, Germany’s DAX shed 0.38% and United Kingdom’s FTSE lost 0.04%.